Steppe Cement Regulatory News (STCM)

15 Sep 2005 09:45

Steppe Cement Limited15 September 2005 STEPPE CEMENT LTD Interim Financial Statements (Unaudited) For the six months ended 30 June 2005 General Information a) Steppe Cement Ltd was incorporated on 17 September 2004 and as suchthere are no comparative figures for the 6 month period ended 30 June 2004; b) Prior to acquisition of Central Asia Cement Holding BV (the 100% holdingcompany of the Cement Business owner, Central Asia Cement JSC), the SteppeCement Ltd Group did not have any operating business. Readers should refer tothe Steppe Cement Ltd AIM Admission Document dated 9 September 2005 for detailsof the Group reconstruction; c) So as to provide readers with an indication of the operating results ofthe core business now owned by the Group, the interim financial statements forCentral Asia Cement JSC, for the six months to 30 June 2005 are provided as anaddendum to the Group's accounts (see Appendix I); furthermore d) The pro forma balance sheet from 31 December 2004 as included in theSteppe Cement Ltd AIM Admission Document has been updated based on the 30 June2005 accounts for each of the Group companies (see Appendix II). This pro formais provided to illustrate the effects of the corporate reorganization eventswhich established the current Group structure on the financial statements ofSteppe Cement Ltd as of 30 June 2005 on the assumption the corporatereorganization events which took place during July and August 2005 werecompleted at 30 June 2005. Summary of Contents 1. Consolidated interim financial statements of Steppe Cement Ltd for the six months ended 30 June 2005; 2. Interim financial statements of Central Asia Cement JSC for the six months ended 30 June 2005 - Appendix I; and 3. Pro forma Consolidated Balance Sheet of the Group as at 30 June 2005 - Appendix II. Page 1. STEPPE CEMENT LTD (Incorporated in Labuan FT, Malaysia under the Offshore Companies Act, 1990) AND ITS SUBSIDIARY COMPANY INCOME STATEMENTS (Unaudited) FOR THE SIX MONTHS ENDED 30 JUNE 2005 Note The Group US$'000 The Company US$'000Revenue - - Other operating expenses (3) (2) -------- ---------- Loss before tax (3) (2)Income tax expense - - -------- ---------- Net loss for the period (3) (2) ======== ========== The accompanying Notes form an integral part of this interim financialstatements. Page 2. STEPPE CEMENT LTD(Incorporated in Labuan FT, Malaysia under the Offshore Companies Act, 1990)AND ITS SUBSIDIARY COMPANY BALANCE SHEETS (Unaudited)AS AT 30 JUNE 2005 The Group The Company Note US$'000 US$'000 Investment in subsidiary company 4 - 1 --------- --------Current AssetsAmount owing by subsidiary company 4 - 25Prepayment 2 1Cash and cash equivalents 22 - --------- -------- 24 26 --------- -------- Current LiabilitiesAmount owing to holding company 5 28 28Accrued expenses 3 2 --------- -------- 31 30 --------- -------- --------- -------- Net Current Liabilities (7) (4) --------- -------- Net Liabilities (7) (4) ========= ======== Represented by: Issued capital 6 1 1Accumulated loss (8) (5) --------- -------- Capital Deficiency (7) (4) --------- -------- The accompanying Notes form an integral part of this interim financialstatements. Page 3. STEPPE CEMENT LTD(Incorporated in Labuan FT, Malaysia under the Offshore Companies Act, 1990)AND ITS SUBSIDIARY COMPANY CASH FLOW STATEMENTS (Unaudited)FOR THE SIX MONTHS ENDED 30 JUNE 2005 The Group The Company US$'000 US$'000 CASH FLOWS FROM OPERATING ACTIVITIES Loss before tax (3) (2) -------- --------- Operating Loss Before Working Capital Changes (3) (2) Increase in:Amount owing by subsidiary company - (23) Increase in:Amount owing to holding company 23 23Other payables and accrued expenses 2 2 -------- --------- Net Cash Generated / (Used) In Operating Activities 22 (0) -------- --------- CASH FLOWS FROM FINANCING ACTIVITY - - -------- --------- Net Cash From Financing Activity - - -------- --------- CASH FLOW USED IN INVESTING ACTIVITY - - -------- --------- Net Cash Used In Investing Activity - - -------- --------- NET INCREASE IN CASH AND CASH 22 -EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD - - -------- --------- CASH AND CASH EQUIVALENTS AT END OF THE PERIOD 22 - -------- --------- The accompanying Notes form an integral part of this interim financialstatements. Page 4. STEPPE CEMENT LTD(Incorporated in Labuan FT, Malaysia under the Offshore Companies Act, 1990)AND ITS SUBSIDIARY COMPANY NOTES TO THE FINANCIAL STATEMENTS (Unaudited) 1. GENERAL INFORMATION The Company was incorporated on 17 September 2004 and its principal activity isinvestment holding. The registered office of the Company is located at BrumbyHouse, Jalan Bahasa, 87011 Labuan FT, Malaysia. As of 30 June 2005 the Group comprised Steppe Cement Ltd ("the Company") and its100% subsidiary Steppe Cement (M) Sdn Bhd ("the Group"). The Group did not havean operating business at 30 June 2005 but through a series of transactions whichtook place subsequent to 30 June 2005, the Group acquired a 100% interest in theowner of a significant cement manufacturing business based in Kazakhstan,Central Asia Cement JSC, through the acquisition of a 100% interest in CentralAsia Cement JSC's 100% holding company Central Asia Cement Holding BV. Further information on the Group reorganisation which took place subsequent to30 June 2005 is provided in the Steppe Cement Ltd AIM Admission Document dated 9September 2005. 2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS The financial statements of the Group and the Company have been prepared inaccordance with International Financial Accounting Standards. 3. SIGNIFICANT ACCOUNTING POLICIES Basis of AccountingThe financial statements of the Group and the Company have been prepared underthe historical cost convention. Basis of Consolidation The consolidated interim financial statements incorporate the interim financialstatements of the Company and of its subsidiary made up to 30 June 2005. Subsidiary companies are consolidated using the acquisition method ofaccounting. On acquisition, the assets and liabilities of the relevantsubsidiary companies are measured at their fair values at the date ofacquisition. Page 5. Basis of Consolidation (Continued) The results of subsidiary companies acquired or disposed during the financialperiod are included in the consolidated financial statements from the effectivedate of acquisition or up to the effective date of disposal. All significant inter-company transactions, balances and resulting unrealisedgains are eliminated on consolidation. Unrealised losses are eliminated onconsolidation unless costs cannot be recovered. Foreign Currency TransactionsTransactions in foreign currencies are converted into United States Dollar atthe exchange rates prevailing at the transaction dates or, where settlement hasnot been made at the date of the financial statements, at the approximateexchange rates prevailing at that date. All foreign exchange gains or losses aretaken up in the income statement. The principal closing rates used in translation of foreign currency amounts inthis interim financial statements: US$ ---Ringgit Malaysia 3.80Kazakstan Tenge 136.25Investment In Subsidiary Company Investment in subsidiary company, which is eliminated on consolidation, isstated at cost in the Company's financial statements. Where there is anindication of impairment, the carrying amount of the investment is assessed andwritten down to its recoverable amount. Cash Flow Statement The Group and the Company adopt the direct method in the preparation of the cashflow statement. Cash equivalents are short-term, highly liquid investments with maturities ofthree months or less from the date of acquisition and are readily convertible tocash with insignificant risk of changes in value. Page 6. 4. INVESTMENT IN SUBSIDIARY COMPANY The Company US$Unquoted shares, at cost 1 =========== As at 30 June 2005, the subsidiary company is as follows: Effective Principal Activities Percentage of Ownership % Steppe Cement (M) Sdn Bhd 100 Dormant- incorporated in Malaysia The amount owing by subsidiary company arose mainly from payments made on itsbehalf, which are unsecured, interest-free and have no fixed term of repayment. 5. HOLDING COMPANY As at 30 June 2005, the Company is a wholly-owned subsidiary of Asian InvestmentManagement Services Ltd, a company incorporated in the British Virgin Islands. Upon completion of the Group's re-organisation (see note 1), the shareholding ofAsian Investment Management Services Ltd was reduced to 34.4% of the Company'sissued share capital. 6. SHARE CAPITAL The Group and the Company US$Authorised:1,000,000 ordinary shares of US$0.01 each 10,000 ========= Issued and fully paid:100,000 ordinary shares of US$0.01 each 1,000 ========= As at 30 June 2005, the authorised share capital of the Company was US$10,000consisting of 1,000,000 ordinary shares of US$0.01 each, and the issued andpaid-up share capital was US$1,000 consisting of 100,000 ordinary shares ofUS$0.01 each. Upon completion of the Group's re-organisation the authorised share capital ofthe Company increased to US$5,000,000 consisting of 500,000,000 ordinary sharesof US$0.01 each, and the issued and paid-up share capital will increase toUS$1,000,000 consisting of 100,000,000 ordinary shares of US$0.01 each. Page 7. APPENDIX I CENTRAL ASIA CEMENT JOINT STOCK COMPANY Interim Financial Statements (Unaudited) For the period of six months ended 30 June 2005 Page 8. CENTRAL ASIA CEMENT JOINT STOCK COMPANY TABLE OF CONTENTS FINANCIAL STATEMENTS FOR THE PERIOD OFSIX MONTHS ENDED 30 JUNE 2005 (Unaudited) Balance Sheet Income Statement Statement of Cash Flow Notes to the Financial Statements Page 9. CENTRAL ASIA CEMENT JSCBALANCE SHEET AS AT 30 JUNE 2005 (Unaudited) Notes 30-Jun-05 30-Jun-04 US$'000 US$'000ASSETS NON-CURRENT ASSETS:Property, plant and equipment, net 1 15,620 2,596Intangible assets, net 4 1 -------- -------- 15,624 2,597 -------- -------- CURRENT ASSETS:Inventories, net 2 5,576 3,436Trade accounts receivable, net 89 587Advances paid, net 867 1,043Other receivables 3 247 443Short-term investmentsCash and cash equivalents 4 6,222 4,951 -------- -------- 13,101 10,460 -------- -------- TOTAL ASSETS 28,725 13,057 ======== ======== SHAREHOLDERS' EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY Share capital 587 586Accumulated profit / (deficit) 5 3,644 (5,766)Capital reserve 6 11,737 - -------- -------- 15,968 (5,180) -------- --------NON-CURRENT LIABILITIES Loans 7 6,000 - -------- -------- 6,000 - -------- --------CURRENT LIABILITIES Trade accounts payable 397 133Other payables and accrued liabilities 8 574 4,775Taxes payable 10 981 301Loans 7 4,000 12,360Advance received 805 667 -------- -------- 6,757 18,237 -------- -------- TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 28,725 13,057 ======== ======== Page 10. CENTRAL ASIA CEMENT JSCINCOME STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2005 (Unaudited) Notes 30-Jun-05 30-Jun-04 US$'000 US$'000 REVENUE 9 19,690 13,633 COST OF SALES 11 (8,200) (5,960) --------- -------- GROSS PROFIT 11,490 7,673 Selling expenses 12 (1,029) (1,030)General and administrative 13 (1,938) (1,882)expenses --------- --------OPERATING PROFIT 8,523 4,761 --------- -------- Finance cost, net (692) (311)Other income / (loss),net 14 (183) 686 --------- --------PROFIT BEFORE INCOME TAX 7,648 5,136 INCOME TAX EXPENSE (2,294) (1,342) --------- --------NET PROFIT for the period 5,354 3,794 ========= ======== Page 11. CENTRAL ASIA CEMENT JSCSTATEMENT OF CASH FLOWSFOR SIX MONTHS ENDED 30 JUNE 2005 (Unaudited) 30-Jun-05 30-Jun-04 US$'000 US$'000OPERATING ACTIVITIESProfit before income tax 7,648 5,136Adjustments for:Depreciation and amortisation 295 113Loss on disposal of property, plant and equipment 2 5Unrealised exchange (gain)/loss 459 (705)Finance costs, net 599 302 ------- ------- Operating cash flow before movements in working 9,003 4,851capitalIncrease in trade and other debtors (316) 276Increase in inventories (44) (691)Increase in trade accounts payable and other accrued (173) 642liabilities ------- ------- 8,470 5,078Income tax paid (1,816) (1,342)Interest paid (614) (311) ------- -------Net cash provided by operating activities 6,040 3,425 ------- ------- INVESTING ACTIVITIESInterest received 16 9Purchase of property, plant and equipment (738) (521)Purchase of intangible assets (4) ------- -------Net cash used in investing activities (726) (512) ------- ------- FINANCING ACTIVITIESBank loan repayment (1,908) -Repayment of loans (259) - ------- ------- (2,167) - ------- ------- NET INCREASE IN CASH AND CASH EQUIVALENTS 3,147 2,913CAH AND CASH EQUIVALENTS, beginning of the period 3,075 2,038 ------- -------CAH AND CASH EQUIVALENTS, end of the period 6,222 4,951 ======= ======= Page 12. CENTRAL ASIA CEMENT JSCNOTES TO THE ACCOUNTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 1. PROPERTY PLANT AND EQUIPMENT, NET Property, plant and equipment as at 30 June 2005 and 2004 consisted of the following: Land & Improvement Buildings Machinery and Other assets Construction Total equipment in progress US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 -------- -------- -------- ------- -------- -------Cost As at 1 179 1,487 1,320 1,124 156 4,266January 2005Additions 2,999 69 164 176 605 4,013Revaluation - 11,737 - - - 11,737Disposals - - (2) (28) (271) (301) -------- -------- -------- ------- -------- -------As at 30 June 3,178 13,293 1,482 1,272 490 19,7152005 -------- -------- -------- ------- -------- ------- AccumulateddepreciationAs at 1 - 179 386 261 - 826January 2005Additions - 3,136 51 82 - 3,269Disposals - - - - - - -------- -------- -------- ------- -------- -------As at 30 June 3,315 437 343 - 4,0952005 -------- -------- -------- ------- -------- ------- NET BOOK 3,177 9,978 1,047 929 490 15,620VALUE ======== ======== ======== ======= ======== ======= At 30 June 3,178 9,978 1,045 929 490 15,6202005At 30 June 179 937 819 584 77 2,5962004 2. INVENTORIES, NET Inventories, net as at 30 June 2005 and 2004 consisted of the following: 30-Jun-05 30-Jun-04 US$'000 US$'000 Work in progress 1,551 1,286Finished goods 628 224Fuel 411 213Raw materials 233 1,124Spare parts 233 158Goods for resale 89 103Packing material 65 42Other materials 2,365 628Provision for 7 (342)obsolete stock -------- ------- Total 5,576 3,436 ======== ======= 3. OTHER RECEIVABLES Other receivables as at 30 June 2005 and 2004 consisted of the following: 30-Jun-05 30-Jun-04 US$'000 US$'000 Loans to employees 99 57 Amount due from subsidiary company - 105 Prepayments 73 54 Others 75 227 ------- -------- Total 247 443 ======= ======== 4. CASH AND CASH EQUIVALENTS Cash and cash equivalents as at 30 June 2005 and 2004 consisted of the following: 30-Jun-05 30-Jun-04 US$'000 US$'000 Cash in banks, in KZT 5,970 4,853 Cash in banks, in USD 7 7 Petty cash 37 35 Restricted cash 208 56 ------- ------- Total 6,222 4,951 ======= ======= 5. ACCUMULATED SURPLUS 30-Jun-05 30-Jun-04 US$'000 US$'000 Balance as at 31 December 2004 (1,709) (9,560) Net profit for the period 5,353 3,794 ------- ------- Balance as at 30 June 2005 3,644 (5,766) ======= ======= 6. CAPITAL RESERVE 30-Jun-05 30-Jun-04 US$'000 US$'000 Net book value of revalued assets 206 - At valuation 11,943 - ------- ------- Valuation surplus 11,737 - ======= ======= Page 14. 7. LOANS Interest 30-Jun-05 30-Jun-04 rate US$'000 US$'000 JSC 12.5% 10,000 - Kazkommertsbank Cement Engineering 2 x 1 - 350 Consultancy year LIBOR Kazakhstan 2 x 1 - 12,010 Investment Fund year ------- ------- LIBOR Total 10,000 12,360 ======= ======= 8. OTHER PAYABLES AND ACCRUED LIABILITIES 30-Jun-05 30-Jun-04 US$'000 US$'000 Payables to 197 152 employees Other payables to related 107 3,899 parties Other payables and 270 724 accruals ------- ------- Total 574 4,775 ======= ======= 9. REVENUE Revenue for the periods ended 30 June 2005 and 2004 consisted of the following: 30-Jun-05 30-Jun-04 ----------- US$'000 US$'000 Sales - manufactured 19,374 13,435 goods Other sales 316 198 ------- ------- Total 19,690 13,633 ======= ======= 10. TAXES PAYABLE Taxes payable as at 30 June 2005 and 2004 consisted of the following: 30-Jun-05 30-Jun-04 US$'000 US$'000 Corporate income 454 - tax, net Value added tax 506 279 Personal income (3) (25) tax Other taxes 24 47 ------- ------- Total 981 301 ======= ======= Page 15. 11. COST OF SALES Cost of sales for the period ended 30 June 2005 and 2004 consisted of the following: 30-Jun-05 30-Jun-04 ----------- ----------- US$'000 US$'000 Cost of production Materials 4,422 3,518 Payroll and related taxes 1,396 1,034 Electricity 762 722 Depreciation 43 15 Other 988 769 ------- ------- 7,611 6,058 ------- ------- ------- ------- Work in progress at beginning of the 1,400 818 year Work in progress at end of the year 1,551 1,286 ------- ------- ------- ------- Change in work in progress (151) (468) ------- ------- Finished goods at beginning of the 1,134 470 year Finished goods at end of the year 629 224 ------- ------- ------- ------- Change in finished goods 505 246 ------- ------- Cost of sales, manufactured goods 7,965 5,836 Cost of sales, purchased goods 235 124 ------- ------- Total 8,200 5,960 ======= ======= 12. SELLING EXPENSES Selling expenses for the period ended 30 June 2005 and 2004 consisted of the following: 30-Jun-05 30-Jun-04 ----------- ----------- US$'000 US$'000 Railway transportation 858 907 Payroll and related taxes 71 48 Shipping and transportation 55 43 Rent 8 11 Advertising 8 3 Others 29 18 ------- ------- Total 1,029 1,030 ======= ======= Page 16. 13. GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses for the period ended 30 June 2005 and 2004consisted of the following: 30-Jun-05 30-Jun-04 US$'000 US$'000 Legal services 82 797 Payroll and related taxes 430 369 Management fee 288 180 Tax and custom duties 113 45 Utilities 23 24 Bank service payments 90 24 Bad debt provision - - Business trip expenses 50 16 Communication costs 27 16 Stationeries 2 1 Depreciation and amortisation 26 12 Office costs 29 6 Laboratory expenses 2 2 Other expenses 776 390 ------- ------- Total 1,938 1,882 ======= ======= 14. OTHER INCOME, NET 30-Jun-05 30-Jun-04 US$'000 US$'000 Foreign exchange gain/ (loss) (488) 705 Gain/(loss) on disposal of property, plant (2) (5) and equipment Other gain / (loss) 307 (14) ------- ------- Total (183) 686 ======= ======= 15. RELATED PARTIES 30-Jun-05 30-Jun-04 US$'000 US$'000 Management service fee 300 150 Legal service fee - 734 Loans payable - 12,360 Accrued management fee - 617 Accrued interest on loans - 3,282 ------- ------- Total 300 17,143 ======= ======= Page 17. APPENDIX II STEPPE CEMENT LTD (Incorporated in Labuan FT, Malaysia under the Offshore Companies Act, 1990) PRO FORMA CONSOLIDATED BALANCE SHEETS AS AT 30 JUNE 2005 The Pro forma Consolidated Balance Sheets as at 30 June 2005 as set out below isprepared for illustrative purposes only to show the effects of the corporatere-organisational events which established the current Group structure on thefinancial statements of Steppe Cement Ltd on the assumption that the corporatere-organisational events were completed on 30 June 2005. Because of its nature, the Pro forma Consolidated Balance Sheet addresses ahypothetical situation and, therefore, does not represent the Group's actualfinancial position. Central Asia Cement Steppe Cement Ltd and JSC Pro forma its subsidiary After corporate reorganisation Adjustment 30 June 2005 30 June 2005 30 June 2005 US$'000 US$'000 US$'000 US$'000 Assets Non-current assets Property, plant and - 15,620 - 15,620 equipment, net Intangible assets, net - 4 - 4 Total non-current assets - 15,624 - 15,624 Current Assets Inventories, net - 5,576 - 5,576 Trade receivables, net - 189 - 189 Advances paid, net - 867 - 867 Other receivables, net 2 247 27 276 Cash and cash equivalents 22 6,222 (2,867) 3,377 Total current assets 24 13,101 (2,840) 10,285 Total assets 24 28,725 (2,840) 25,909 Page 18. Steppe Central Adjustment Pro forma After Cement Ltd Asia corporate and its Cement reorganisation subsidiary JSC 30June 30 June 30 June 2005 2005 2005 US$'000 US$'000 US$'000 US$'000 Liabilities andEquity Shareholder's equityShare capital 1 587 412 1,000Share premium - - 6,300 6,300RevaluationReserve - 11,737 (11,737) -Reserve onconsolidation - - 5,786 5,786Accumulatedprofits /(loss) (8) 3,644 (3,644) (8) Totalshareholders'equity (7) 15,968 (2,883) 13,078 Non-currentliabilitiesLoans - 6,000 - 6,000 Current LiabilitiesTrade payables - 397 - 397Other payablesand accruals 31 574 43 648Taxes payable - 981 - 981Loans - 4,000 - 4,000Advancereceived - 805 - 805 Total currentliabilities 31 6,757 43 6,831 24 28,725 (2,840) 25,909 Page 19. NOTES TO THE PRO FORMA CONSOILDATED BALANCE SHEETSAS AT 30 JUNE 2005 1. BASIS OF PREPARATION The Pro forma Consolidated Balance Sheet of Steppe Cement Ltd as at 30 June 2005has been prepared for illustrative purposes only based on: (i) the unaudited consolidated balance sheet of Steppe CementLtd as at 30 June 2005; (ii) the unaudited balance sheet of Central Asia Cement JSC as at30 June 2005. 2. BASIS OF CONSOLIDATION The financial statements of the subsidiary companies have been consolidatedusing the acquisition method of accounting. On acquisition, the assets andliabilities of the relevant subsidiary companies are measured at their fairvalues at the date of acquisition. All significant intercompany balances areeliminated on consolidation. Goodwill arising on consolidation represents the excess of the purchase priceover the fair value of the net assets of subsidiary companies and is recognisedas an asset. 3. PRO FORMA CONSOLIDATED BALANCE SHEET The Pro forma Consolidated Balance Sheet incorporate on a pro forma basisadjustments for the following transactions as though they were effected as of 30June 2005: (i) The declaration and payment of dividends of US$3,040,000 incash by Central Asia Cement JSC to Central Asia Cement Holding BV; (ii) The payment of US$3,040,000 in cash by Central Asia CementHolding BV to its shareholders in partial satisfaction of shareholders loansestablished on the acquisition of Central Asia Cement JSC by Central Asia CementHolding BV; (iii) The acquisition by Steppe Cement (M) Sdn Bhd, the whollyowned subsidiary of Steppe Cement Ltd, of 100% equity interest in Central AsiaCement Holding BV; (iv) The issue and allotment by Steppe Cement Ltd of 70,000,000ordinary shares of US$0.01 each at an issue price of US$0.10 per share and theissue and allotment of 29,900,000 ordinary shares of US$0.01 each at an issueprice of US$0.01 per share as part of the corporate reorganisation. The resulting share premium of US$6,300,000 has been credited to the sharepremium account. Page 20. This information is provided by RNS The company news service from the London Stock Exchange END